As far as I know, this setting is intended to define the base url of the application when it is not possible to detect it automatically.
A basic example of this is command line execution.
Consider the following example using the command tinker (Larable in iterative mode) command line artisan.
First I leave the configuration file app/config/app.php thus:
// Outras definições ...
'url' => ''
Then I do it on the command line:
php artisan tinker --env=local
> URL::to('/test');
The returned result is : '/test'
Now we have changed the configuration file again. This time I will put a default url.
Example:
// Outras definições ...
'url' => 'http://stackoverflow.com.br/',
We rotated the tinker again :
php artisan tinker --env=local
> URL::to('/test');
The result is: 'http://stackoverflow.com.br/test';
So, note that in the absence of a "base url" for the system, the Laravel will use this url defined in app/config/app.php as the base url.